Dropbox – Yottabytes: Storage and Disaster RecoverySharon Fisher on issues, trends, and analysis in storage and disaster recovery.2018-05-22T15:13:49Zhttps://itknowledgeexchange.techtarget.com/storage-disaster-recovery/feed/atom/Sharon Fisherhttp://itknowledgeexchange.techtarget.com/storage-disaster-recovery/?p=18902018-03-21T13:17:32Z2018-03-21T04:14:13ZAnyone who’s surprised by the Dropbox IPO this Friday, please poke out your right eye. Because this thing has been a loooooooooooooong time coming. As far back as 2011, analysts were speculating that Dropbox would file for an IPO. It was actually pretty surprising when Box filed for one first, in 2014. Then there was...

Today? Box is at 21.69, after going as high as 23.82 and as low as $9.90 since then.

Once Box filed, people expected Dropbox to soon follow. As long ago as 2015, Dropbox had hired a chief financial officer experienced in IPOs, presumably because the company had Plans. And now, finally, the day is here. Like competitor Box, it filed secretly, in January. The guess is that it’s going to go well; reportedly, it is already oversubscribed at its opening price of $16-$18 per share.

On the other hand, its valuation is actually less than it was a few years ago. According to Forbes contributor David Trainer, the valuation is $7 billion. As he himself points out, “At the midpoint of Dropbox’s expected price range, its post IPO valuation would be nearly one-third below the $10 billion valuation it earned in 2014,” he writes.

And Trainer is concerned it means the stock is overpriced. “Dropbox’s revenue growth is slowing. Revenue growth dropped from 40 percent in 2017 to 31 percent in 2016. Paid users grew by 35 percent in 2016 and 25 percent in 2017, while average revenue per paid user has barely changed,” he writes. “Despite amassing a large user base over the past decade (500+ million), Dropbox has yet to monetize these users in a profitable manner.”

Trainer isn’t the only one concerned. All sorts of people are making all sorts of comparison between Dropbox and Snap, which went public last year and didn’t do so well afterwards. In addition, a number of people are also reporting what they say are reasons that Dropbox actually isn’t doing too well (besides the fact that it’s operating at a loss), such as competing offerings from bigger companies such as Google and Microsoft. Plus, the stock market is nothing if not volatile these days.

On the other hand, after the successful IPO of Zscaler, a successful IPO for Dropbox – which will be followed by an IPO for Spotify – could presage all sorts of other major IPOs this year.

]]>0Sharon Fisherhttp://itknowledgeexchange.techtarget.com/storage-disaster-recovery/?p=8382014-05-30T03:38:24Z2014-05-30T03:38:24ZFor a while now, we’ve been reporting how cloud storage vendors such as Google and Microsoft have been dropping their prices, and wondering when Dropbox — which is rumored to be working on an IPO — was planning to follow suit. This week we learned: It ain’t. “We’re not cutting prices right now,” Drew Houston, CEO of Dropbox told Re/code’s Liz...

]]>For a while now, we’ve been reporting how cloud storage vendors such as Google and Microsoft have been dropping their prices, and wondering when Dropbox — which is rumored to be working on an IPO — was planning to follow suit. This week we learned: It ain’t.

“We’re not cutting prices right now,” Drew Houston, CEO of Dropbox told Re/code’s Liz Gannes and Walt Mossberg at the organization’s Code Conference, writes Re/code. Instead, the company is planning to compete not by cutting prices but by offering a better product with more features. What a concept.

Which features? “One is a photo sharing app called Carousel,” writes Re/code. “Another is a yet-to-launch collaboration tool built atop Microsoft Office called Project Harmony; Houston said it should be out by end of year.”

It will be interesting to see whether new applications will encourage more people to pony up money, or if cloud storage will stay a commodity and people will simply go for what’s cheapest. If the latter is the case, Dropbox is in for a problem. Companies like Microsoft and Google can afford to have their other revenue streams support cheap online storage, but for Dropbox, cloud storage is all it has.

On the other hand, this week Dropbox announced, sort of, that it was up to 300 million users, after having hit 200 million users in November 2013 and 100 million in November 2012, according to The Next Web. This wasn’t terribly surprising; the company had announced in April that it had 275 million users.

The question, though, is how many of Dropbox’ users actually pay for the service. Users get up to 2 gigabytes of storage for free, plus bonuses for referring friends and so on. Mark Rogowsky of Forbes did an interesting analysis last fall that, tl; dr, boiled down to this: “That leaves the company with at most 2 million paying customers, or barely over 1% of the total customer base. Given that it mentions having ‘4 million businesses,’ the likelihood is that the actual conversion ratio of ordinary folks is worse than this.”

In other words, if Dropbox were to drop its prices, it may cost it most of the little revenue it has — not a good idea when one is contemplating an IPO in an uncertain market (as Box has already discovered).